New Jobless Claims in U.S. Declined by 2,000 Last Week

By Alex Kowalski -
May 24, 2012

The number of Americans filing first-time claims for unemployment insurance payments declined last
week, pointing to gradual improvement in the labor market.

Applications for jobless benefits decreased by 2,000 to
370,000 in the week ended May 19 from a revised 372,000 the
prior week, Labor Department figures showed today. The initial
claims matched the median estimate in a Bloomberg News survey of
economists. The number of people on unemployment benefit rolls
and those receiving extended payments dropped.

Unemployment claims have retreated from an almost four-year
low earlier this year while remaining at a level that suggests
the job market will be slow to heal, said Jay Feldman, an
economist at Credit Suisse in New York. Absent fewer firings,
companies in the U.S. may not ramp up hiring to levels leading
to bigger payroll growth.

“The labor market is getting better, moving in the right
direction, but there is still a long way to go,” said Feldman,
who correctly forecast the claims figure. “Moderate growth is
the story, and the truth is somewhere in between the wintertime
surge and the slower growth over the past couple of months.”

Orders for computers, machinery and other capital equipment
dropped in April for a second month, pointing to a slowdown in
U.S. business investment, another report showed today. Bookings
for non-military goods excluding aircraft decreased 1.9 percent
after falling 2.2 percent in March, the first back-to-back
decline in a year, data from the Commerce Department said.

Stocks Little Changed

U.S. stocks were little changed after the reports. The
Standard & Poor’s 500 Index declined less than 0.1 percent to
1,318.34 at 10:27 a.m. New York time. The yield on the 10-year
Treasury note climbed to 1.77 percent from 1.74 percent late
yesterday.

Estimates for first-time claims ranged from 360,000 to
393,000 in the Bloomberg survey of 46 economists. The Labor
Department initially reported the prior week’s applications at
370,000.

The four-week moving average, a less-volatile measure, fell
to 370,000, the lowest in a month, from 375,500.

The number of people continuing to collect jobless benefits
dropped by 29,000 in the week ended May 12 to 3.26 million. The
continuing claims figure does not include the number of workers
receiving extended benefits under federal programs.

Extended Payments

Those who’ve used up their traditional benefits and are now
collecting emergency and extended payments decreased by 40,300
to 2.93 million in the week ended May 5.

The unemployment rate among people eligible for benefits,
which tends to track the jobless rate, held at 2.6 percent in
the week ended May 12, today’s report showed. Thirty-six states
and territories reported an increase in claims, while 17
reported a decrease.

Companies added 115,000 employees to payrolls last month,
the fewest since October, and the jobless rate fell to 8.1
percent as people left the labor force, according to May 4
figures from the Labor Department.

Economists foresee the pace of job creation rising to
150,000 from April’s six-month low, according to the median
estimate in a Bloomberg News survey. Even so, such a rate of job
creation would be lower than any month in the first quarter.

‘Measured Efforts’

“Circumstances today in the U.S. call for continued
measured efforts to quicken the pace of recovery and shrink
unemployment,” Federal Reserve Bank of Atlanta Dennis Lockhart
said during a May 21 speech. “Current economic data continue to
be a mix of positives and negatives.”

General Mills Inc. (GIS) is among companies adding people to the
pool of unemployed workers. The maker of Wheaties cereal and
Yoplait yogurt said this week it will cut 850 jobs worldwide to
boost productivity and manage costs. The reductions will be
mostly administrative and support positions, and about half will
be at the company’s Minneapolis headquarters, according to a May
22 statement.